MARKET REPORT: It’s over and good riddance… Traders glad to see back of 2011

| December 31, 2011 | 0 Comments

Geoff Foster

Last updated at 10:15 PM on 30th December 2011

That’s it then, it’s over and good riddance
to 2011. A shortened trading session pulled
the curtain down on a roller-coaster year
which was dominated by fears over Europe’s
dire sovereign debt crisis and double-dip
recession worries.

The Footsie was unable to
make it a hat-trick of gains after last year’s
rise of 9 per cent and the impressive leap of 22 per cent achieved in 2009. It closed yesterday 5.51
points higher at 5,572.28 to end the year
almost 6 per cent down, while the FTSE 250 lost
around 13 per cent over the period to 10,102.9.

Although £90.5billion was wiped from blue chip
share values in 2011, investors at New Year
parties should be thanking their lucky stars,
because it could have been a lot, lot worse.

FTSE 100

Back in August the UK’s premier index
touched a low of 4,791 and recorded its
biggest one day fall (191 points) since March
2009, while Wall Street crashed over 600 points
in one session. Alarm bells rang after Standard
Poor’s cut its credit rating on the world’s
biggest economy for the first time ever.

Yet seemingly against all the odds, share
prices have rallied strongly on hopes that
one day, yes one day, politicians will get their
acts together and find a solution to the eurozone
debt crisis.

Italy, which is the eurozone’s third-largest
economy, still finds itself at the centre of the
crisis that began two years ago in Greece.
This week it managed to get crucial bond
auctions away but still faces €100billion of bond
redemptions and coupon payments by the
end of April, which will keep investors feeling
nervous going into the New Year.

In 2011 the market has been typified by
violent swings in both sentiment and points.
Volatility is here to stay and investors will
have to get used to it.

The UK market always relies on Wall Street
to behave itself, and perhaps another reason
why the Footsie has been able to bounce
back is because the US market has been particularly
resilient. Indeed, Wall Street has
risen 6 per cent on the year amid hopes that its
economy is on the mend.

Mining stocks have perhaps been the most
volatile, dancing to the tune of metal prices
which themselves have responded either way
to China’s economic performance. African
Barrick Gold, which operates in Tanzania,
was the top performer yesterday with a gain
of 18.7p at 458.8p, but still trades well below
the year’s peak of 624p.

British aerospace electronics firm Cobham
put on 5.3p to 183.4p. The search goes on for
a new group chief executive after Andy
Stevens announced in mid-November that
he was standing down due to a ‘long-term
serious back injury’.

Its been a traumatic
year for travel operators with the unrest in
key North African holiday destinations and
the eurozone debt crisis demolishing business.
Thomas Cook, Europe’s second-biggest
travel firm by sales, has had to announce
the closure of 200 UK shops after securing a
rescue package from its banks. The shares
closed at 14.75p to trade over 90pc down on
the year.

TUI Travel, 3.8p higher at 165.8p, must
have benefited from its rival’s woes. Recent
annual results showed a swing in full-year
profits to £144million from a loss of £73million last time.
Cost savings in its UK operations saw TUI
return to a £4million net cash position from net
debt of £249million in 2010.

Hoping its third-quarter trading statement
on January 11 will show that it enjoyed a
bumper Christmas trading period, supermarket
group J.Sainsbury advanced 6.9p to
302.9p. Broker Charles Stanley is a fan and
says that although trading conditions are
likely to remain tough going forward, Sainsbury
can continue to deliver steady earnings
growth under such conditions.

A well informed source says the mega-rich
Qataris are currently drawing up a New Year
shopping list of UK targets. The Arab investors
have been long-term 26 per cent shareholders
of Sainsbury after walking away from a £6 a
share cash offer years ago. Perhaps they
could have another go Joe in 2012.

BG Group was supported up to 1397p after
announcing, along with its partners Petrobas
and Repsol, that the Guara field in Brazil’s
Santos basin, south of Rio de Janeiro, is commercially
viable. It closed 6p dearer at
1376.5p after some traders trousered profits
on hearing executive vice president Ashley
Almanza had sold 72,079 shares at 1377.6588p
and his wife Gillian 87,921 at 13776.558p.

Considered to be ‘in-play’ since America’s
Cooper Industries refused to pay no more
than £2 a share for the electrical equipment
and withdrew its cash offer in August, Laird
rose 6.9p to 154.2p on hopes another bidder
will soon show its face. Laird’s board wanted
Cooper to fork out 220p a share.

Cable Wireless Worldwide buzzed 0.64p
higher to 16.25p on confirmation that former
boss John Pluthero will step down today.

- Up an impressive 8 per cent in 2011, Vodafone,
0.05p easier at 178.9p, is still a stock to
watch in 2012, says Richard Hunter, head
of equities at Hargreaves Lansdown.
The exponential growth in the use of
smartphones is playing into the mobile
phone giant’s hands. It has maintained its
target of 7 per cent dividend growth per annum
until 2013, while the current yield of around
5 per cent is a further investment attraction.

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